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High Port Fees Squeeze SoCal Bike Importers

Published June 16, 2009

BY JASON NORMAN

LOS ANGELES, CA—Heightened security measures and new environmental regulations at Southern California ports are putting a squeeze on companies importing containers of bikes from overseas.

“The last four years port fees have gone up 140 percent for us,” said Dick Steele, who works in purchasing and product development for Phat Cycles in Huntington Beach, California. “That’s really inflationary.”

Many report that rising port fees have greatly impacted their cost of doing business. They’ve had to pass the buck, resulting in increases in the price deal ers pay for bikes and final retail price of floor models.

“A 40-foot container typically holds around 270 adult bikes and now costs an extra $140 to import to an L.A.-based warehouse,” said Brad Parkins, purchase order systems manager for Giant. “So you can do the math and see that it adds about $0.50 per bike and about $1.50 to a bike by the time the bike reaches retail.”

One of the most recent fee increases is the Clean Truck Fee imposed on trucks—2006 model year or older—using the Port of Los Angeles and Port of Long Beach.

The $70-plus container fee is expected to be temporary and will be enforced until truckers invest in new and cleaner trucks. But that can be costly. New trucks can cost more than $300,000, while overhauling current trucks to meet these new environmental requirements can cost $100,000. Money collected from the fees is intended to help truckers conform to these new, cleaner standards.

And beginning next January, U.S. Customs and Border Protection will require importers and carriers to electronically submit additional information on cargo before it enters the United States by vessel. Importer Security Filing (ISF) is another step in the Department of Homeland Security’s strategy to better assess and identify high-risk shipments to prevent terrorist weapons and materials from entering the country.

“If you don’t follow these ISF regulations, there’s going to be a fine of $5,000,” said Wayne D. Gray, vice president of KHS Bicycles.

Meeting these ISF regulations can add anywhere between $15 and $50 per container, depending on the supplier’s customs broker.

“It feels like I have no control,” Gray said about dealing with privately owned ports and the regulations and fees that they impose. “There’s nothing you can do to push back.”

Five years ago, the Ports of Los Angeles and Long Beach began charging a traffic mitigation fee of more than $70 per container for cargo movement through the ports during peak hours. Proceeds from the fees have been used to open the terminal gates four nights per week and on Saturdays.

The program ruffled the feathers of several Southern California bike companies including Phat Cycles.

Dahon USA general manager Pete Mole believes the fee increases have gotten more plentiful and steep in the last several years compared to a decade ago.

“These fees may be justified, but I don’t know,” said Mole, who’s been with Dahon for 18 years and in the industry for more than 50 years.

“We have a contract with Evergreen where they take it door to door,” Mole said of his overseas shipping arrangement.

While Dahon might not see the cost increases immediately, the company feels them when Evergreen’s bill arrives. “You’re going to pay for these fees one way or another,” Mole said.

Some companies are choosing alternate ports with lower fees. For example, Swobo, based in the Bay Area, is bringing its containers into the Port of Oakland instead of Long Beach, where fees are higher.

Swobo also joined the Sporting Goods Shippers Association, a nonprofit founded in 1993 and run by Angie Munson to represent bicycle companies and distributors that import from the Far East.

“Angie gangs up all the container traffic for everyone who is importing into the U.S. and goes to all the freight companies and negotiates our rates,” said Swobo’s Sky Yaeger. “So, collectively we get a much better rate than if each one of us went to Evergreen or NYK separately.”

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